Blue-Chip Rally Lifts Dow to 7-Week High

Stocks rose broadly Tuesday, triggered by a late rally in the blue chips that lifted the Dow Jones industrial average to its highest level in nearly seven weeks.

Financial, auto, paper and retail issues also paced the gainers, and most computer stocks rebounded from their recent drubbing.

The Dow Jones average of 30 industrials rose 12.15 to 1,278.71, its best gain since March 19, when it climbed 21.42. Tuesday’s rise also lifted the average to its highest level since it stood at 1,280.37 on March 6.

Advances led declines three to two on the New York Stock Exchange, whose composite index rose 0.63 to 105.43.

Big Board volume swelled to 108.92 million shares--its highest level since March 19--from 79.93 million Monday.

Until the final hour, when the Dow Jones industrials began moving up sharply, the market had extended its lackluster performance of recent weeks.

Investors already concerned about a weakening economy received a fresh signal that the expansion is slowing when the Commerce Department reported a 2.3% drop in March factory orders for durable goods.

In addition, interest rates rose in the money markets, reversing their recent declines. For example, the closely watched federal funds rate, the interest on overnight loans between banks, was subjected to wide swings, rising as high as 8% before settling at 6.5%. That compared to Monday’s late rate of 7.75%.

One of the market’s blue chips, General Motors, added to the downbeat mood when it posted lower first-quarter earnings. GM’s stock temporarily fell after the results were announced but then rebounded, which apparently helped the market’s tone going into the final hour.

Otherwise there was no particular news that triggered the late rally, and there were no indications that it marked a major shift of investor sentiment, said Jacques S. Theriot, senior vice president of Smith Barney, Harris Upham & Co.

“There still doesn’t seem to be an excessive amount of conviction to it (the market) one way or the other,” Theriot said.

GM finished up 1/8 at 71 1/8. Among other blue chips, International Business Machines rose 1 to 129, Sears, Roebuck gained 1/2 to 33, Allied jumped 1 1/2 to 44 5/8 and Eastman Kodak climbed 1 to 66.

Data General slumped 2 1/8 to 39 after reporting lower fiscal second-quarter profit, but other computer makers fared better. Burroughs rose 1 to 60 5/8, Hewlett-Packard gained 1/2 to 33 7/8 and Prime Computer rose 5/8 to 16 3/4.